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Pull factors and capital inflows : empirical insights from transformative dynamics in Southeast EuropeMehmed Ganić,
Nedim Gavranović, 2024, original scientific article
Abstract: This study seeks to examine pull factors of capital inflows, offering an
empirical analysis based on a panel study of eleven Southeast
European countries (Albania, Bosnia and Herzegovina, Bulgaria,
Croatia, Greece, Montenegro, North Macedonia, Kosovo, Romania,
Serbia, and Türkiye) over the period of 2004 – 2021. Methodologically,
the study utilizes a fixed effects (FE) regression model with robust
Driscoll-Kraay standard errors to address issues of heteroskedasticity,
autocorrelation, and potential cross-country correlation. The study
finds that several pull factors can be relevant in driving capital inflows
as follows: market size, inflation, financial and trade openness. The
empirical analysis confirms that the forces of trade liberalization,
financial liberalization, market size, real interest rates and inflation
stability are the elements that encourage capital inflows. On the other
hand, the estimated effects of current account balance and real
economic growth are not very convincing. Finally, we stress that more
study is required to fully understand the pull variables' ultimate
macroeconomic implications at the national level. The overall
influence of these positive (or negative) inflows may be moderated by
several characteristics, even if certain countries may be extremely
susceptible to these factors.
Keywords: capital inflows, pull factors, southeast Europe, panel data analysis, Driscoll-Kraay standard errors
Published in DKUM: 28.05.2025; Views: 0; Downloads: 0
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